One clear effect of the recent global economic recession is that it has highlighted the rapidly changing and evolving nature of today’s economy, and the many challenges that will need to be overcome if further recessions are to be avoided.
A significant factor affecting business in the modern global environment is the deepening sense within societies that outlooks, priorities, and processes need to be radically altered to accommodate developments in human civilization. Writing for Yes Magazine, for example, Gar Alperovitz describes “a deepening sense of the profound ecological challenges facing the planet and growing despair at the inability of traditional politics to address economic failings” (Alperovitz, 2011, n.p.). For Alperovitz, the increasing awareness of the need within society for issues such as poverty, environmental sustainability, and equality to be addressed means that businesses will need to radically alter their ideologies, goals, and processes in order to remain successful (Alperovitz, 2011, n.p.). Like any other process of change, these alterations are likely to be challenging, as they require the abandonment of deeply entrenched beliefs about capitalism and business.

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However, highlighting the importance of changing such beliefs is the challenge faced by businesses in the form of the exponential rate at which technology is developing. New technologies and social developments mean that the economy is uncertain, as “markets shift, technologies proliferate, competitors multiply, and products become obsolete almost overnight” (Nonaka, 1991, p. 162). This rapid pace of development is increasing; to be successful businesses in coming years will be faced with the challenge of not only keeping pace but being able to think one step ahead of the market.

For Alperovitz, the solution to the global and social changes facing businesses in the coming years is to change the organization and the goals upon which business operate. He calls for “an economy that is increasingly green and socially responsible, and one that is based on rethinking the nature of ownership and the growth paradigm” (Alperovitz, 2011, n.p.). For example, he identifies success in the models provided by companies who have made changes to their modes of ownership and the distribution of profits: businesses with priorities broader than mere profit margins, such as egalitarian, green, worker-owned cooperatives, and non-profit corporations serving community needs, as well as B-corporations which allow a company to officially declare non-profit goals to shareholders (Alperovitz, 2011, n.p.). These models indicate the ways in which companies can innovate to match their goals and processes to the social issues emerging in wider society.

For these types of changes to be possible, however, new mind-sets concerning business and the economy are necessary. As early as 1985, Peter Drucker argued that innovation is crucial to keep pace with such a rapidly changing marketplace and economy (Drucker, 1985, 67). Innovation in the upcoming years is likely to involve the psychology of business as much as the technology of products. For Nonaka, a successful model for such innovative thinking can be found in many successful non-Western cultures; he writes of how understanding in countries such as Japan and Taiwan of how to access and apply knowledge involve fundamental changes to the relationship between company and employee, resulting in greater innovation: “The key to this process is personal commitment, the employees’ sense of identity with the enterprise and its mission” (Nonaka, 1991, p. 164).

Capitalism is ingrained in American ideology, making changes to the existing economic model challenging to implement (Alperovitz, 2011, n.p.); however, as these writers have argued, innovative approaches to the relationship between business and society can help to overcome the stagnation of traditional economic models, leading to a healthier and more sustainable economy.

    References
  • Alperovitz, G. (2011, May 26). “The Old Economy’s Not Coming Back. So What’s Next?” Yes Magazine. Retrieved from: http://www.yesmagazine.org/new-economy/the-new-economy-movement.
  • Drucker, P. F. (1985). “The Discipline of Innovation.” Harvard Business Review, May-June, 67-72.
  • Nonaka, I. (1991). “The Knowledge-creating Company.” Managing For the Long Term: Best of Harvard Business Review, July-August 2007, 162-171.